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Brexit contingency planning revives old issue of MEP apportionment

Copyright Grecaud Paul (Adobe Stock)

With the United Kingdom’s exit from the European Union fast approaching, European political scientists and parliamentarians are struggling to address the impending vacancy of the country’s 73 seats in the European Parliament.

At the conclusion of the two-year transition period tied to Article 50 procedures, the supranational legislative body will see its membership drop from 751 to 678 unless European leaders can reach an agreement on the fate of those seats. Several MEPs and national politicians have floated proposals to reallocate seats to address issues of proportional representation and European unity.

One such proposal, which has alternatively generated enthusiasm and strong skepticism along party lines within the European Parliament, entails the establishment of a supranational constituency that would provide for European voters to select at-large candidates regardless of residency of both the voters and the candidates.

This idea was originally floated in 2011 by then-MEP Andrew Duff (ALDE–UK), but it failed to gain traction beyond initial consideration by the Constitutional Affairs Committee.[1] However, the Italian government reintroduced the idea before the European Council in April 2017, and French president Emmanuel Macron gave the proposal renewed impetus in September 2017, with French officials arguing that a transnational list could “increase the visibility of trans-European parties” and “send a message of unity and confidence” in European integration.[2] Read More…

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News roundup: ECB eyes changes to euro clearing supervision; banks turn their attention to Frankfurt

FINANCIAL TIMES SPECIAL REPORT ON BREXIT AND LUXEMBOURG

A new series of articles published by the Financial Times delves deeper into the potential gains that Brexit can deliver for Luxembourg, a small country of 570,000 residents where roughly 1 in every 30 individuals works in financial services. See the full series of articles here. For more information, please also see my May 2017 report on the effects of Brexit on Europe’s financial services industry, which includes special coverage on Luxembourg, Frankfurt, Paris, and other select cities.

MORE FINANCE FIRMS LOCK SIGHTS ON FRANKFURT AND OTHER EUROPEAN CITIES

US-based investment bank Morgan Stanley is nearing a decision  to establish its new European hub in Frankfurt, according to Steven Arons and Gavin Finch of Bloomberg. While the bank will retain some jobs in London, it is relocating securities trading activities to Frankfurt and its asset management business to Dublin. Goldman Sachs is planning a similar shift to Frankfurt, according to Tino Andresen of Bloomberg, with plans currently in place to double its current Frankfurt-based staff of 200, with the potential to add as many as 1,000 workers in the German city as it works to ensure continued access to European clients. Neil Callanan and Jack Sidders of Bloomberg report that JP Morgan Chase is also making new investments, including a new $139 million office building in Dublin, which could host upwards of 1,000 employees, and is eyeing property in Amsterdam as well.

KEY DEVELOPMENTS IN EURO-DENOMINATED CLEARING

June 18, 2017 — Jonathan Ford of the Financial Times (UK) reported that the European Commission has proposed “some form of joint supervision,” in which clearinghouses based in the United Kingdom can continue to clear euro-denominated securities and derivatives, albeit with the caveat that “systemically important” central counterparties such as LCH Clearnet and ICE, which handle such financial instruments as interest rate and equity derivatives and credit default swaps, to agree to parallel supervision by British financial regulators and their EU counterparts.

June 22, 2017 — Hayley McDowell of The Trade (UK) wrote that French markets regulator Autorité des Marchés Financiers “has called for reforms to the governance and central role of the [European Securities and Markets Authority],” including a central role in the “directive supervision of … central counterparties.”

June 23, 2017 — Alessandro Speciale of Bloomberg (US) has reported that the European Central Bank is actively seeking an amendment to its authorizing legislation that would expand its mandate to include “clear legal competence” over extra-EU clearinghouses handling euro-denominated transactions. According to the Bank of International Settlements, “about 75 percent of trading in euro-denominated interest-rate swaps takes place in Britain.”

Brexit: Regulatory equivalence and single market access for the financial services industry

The attached document, originally submitted in May 2017 as my Master’s thesis upon the conclusion of my Master of Arts in International Relations (concentrations in European regional studies and international economics), provides an in-depth assessment of the regulatory framework that has allowed financial services firms in London to access the European Union’s single market, as well as the changes that could come with Brexit and the possible results for competing European financial centers.